Regional Victoria is witnessing a significant surge in commercial property activity, driven by robust economic growth and a notable shift of businesses and residents seeking affordability and opportunity beyond Melbourne’s metropolitan boundaries.

Regional centres such as Mildura and Albury/Wodonga are emerging as strategic warehousing and logistics hubs. These areas benefit from strong transport links and relative affordability, attracting businesses looking to optimise their distribution networks. The increase in demand and limited supply has seen land and rental values more than double over the past five years with some new stock commanding up to $300 per square metre in rent.

The shift towards e-commerce and just-in-time logistics has accelerated demand for warehousing space, particularly in regional corridors that offer access to both regional and metropolitan markets. Warehousing is no longer confined to traditional industrial zones; regional areas are becoming crucial nodes in the national supply chain.

The industrial property market in regional Victoria in particular, has experienced substantial growth. To support this momentum, the Victorian Government announced a $10 million investment in December 2024 aimed at unlocking industrial land in regional areas. This funding focuses on developing essential infrastructure such as water supply, sewerage, roads, and electricity, thereby facilitating further industrial development.

According to Utenant, changes brought on by the COVID-19 pandemic have had a lasting effect on warehousing, driving businesses to favour decentralised models. Flexibility, cost-efficiency, and access to regional labour pools have all contributed to this trend, further enhancing the appeal of regional Victoria for industrial occupiers.

The retail sector in Victoria has also shown steady improvement. In the fourth quarter of 2024, retail turnover experienced a 2.0% increase over the preceding three months. This growth aligns with a tightening labour market, as evidenced by a decrease in Victoria’s unemployment rate to 4.2%. The projected retail supply for 2025–2026 is approximately 268,000 square metres, encompassing developments in the CBD, shopping centres, and large-format retail assets.

Victoria’s economy is on a positive trajectory, with a forecasted growth rate of 2.5% in 2024–25, expected to rise to 2.75% in 2025–26. The labour market is set to expand significantly, with an anticipated addition of approximately 392,000 workers by 2027 and 1,421,000 by 2034. Sectors such as health care, social assistance, and construction are projected to lead this workforce growth.

The appeal of regional Victoria is further underscored by migration patterns. Net regional migration remains higher than the preceding five-year average, indicating a sustained influx of residents to these areas. While earlier assumptions suggested older demographics were driving this trend. 

Many movers are in their 30s and 40s with young families, seeking lifestyle advantages and employment flexibility rather than solely retirement options. This evolving demographic is creating vibrant, economically active communities across regional Victoria.

Population growth has led to increased demand for housing, with regions like Mildura, Mansfield, Swan Hill, and Moyne Shire experiencing significant annual rent increases. According to Domain data, Mildura, for example, has recorded the highest growth in asking rents of anywhere in regional Victoria, with a median of $475 after a 15.9% annual spike. Asking rents have increased by 10% or more over the past 12 months in seven regional local government areas.

The confluence of industrial and retail sector expansion, strategic government investments, and favourable economic indicators positions regional Victoria as an increasingly attractive destination for businesses and residents alike. This trend not only alleviates pressure on Melbourne’s metropolitan areas but also fosters balanced economic development across the state.